Contra Costa Taxpayers Association

Guest Editorial - Community Choice Power: Government at Its Worst

01 Feb 2016 4:45 PM |
Anonymous

Community Choice Power:

Government at its worst

Community Choice Aggregation, also known as Community Choice Power, has landed in San Francisco, Sonoma and Marin counties and crept into Contra Costa via Marin Clean Power in Richmond. Contra Costa County is now considering going “full steam ahead”, if you pardon the pun, as a Community Choice provider via a government JPA (Joint Powers Agreement) with local city governments.

Let’s hope not. Community Choice Aggregation is government at its worst. Government has proven incompetent at regulating PG&E so now it wants to ratchet up its efforts by giving local governments the power to make PG&E their indenture servant and us its ultimate victims.

Community Choice Aggregation:

- Wrongly expands the coercive powers of local government;

- Has several negative tax impacts;

- Allows the JPA to legally misrepresent the quality of the electricity it sells;

- Gives the JPA the abusive roles of partner, competitor, regulator and taxing authority over PG&E and their joint customers - us.

Community Choice Aggregation is coercive in several ways. The 2002 legislation that created Community Choice Aggregation allows for a sophisticated, uncompensated “taking” by local government without payment by forcing PG&E into a “master/slave” relationship with government agencies. PG&E must do ALL the work: build and maintain the distribution system, the billing system, the customer relationship system, and the support systems needed to run a utility. PG&E must hire, train, and manage the employees that perform all the work and handle all interaction with customers.

Government just takes the profits.

CCA is also coercive in its implementation. The legislation creating this monster mandates that all residents in the geographical area of the JPA are automatically switched to the JPA as customers. To not be switched, a customer must beg (“opt out” in government terminology) to stay with PG&E. It is government force substituting for a marketing and sales capability. Why be good when you can be government?

Next, a government JPA pays no taxes. PG&E does. Who is going to make up for the loss of tax revenue? There is a reason there is no mention of taxes on the Marin or Sonoma clean energy websites.

Community Choice aggregators frequently brag about being less expensive; when they actually are in it primarily because they pay no taxes (and can tax PG&E their “competitor”).

Their tax advantage also allows them to use tax free bonds to purchase or build power generation facilities, again giving them a competitive advantage in the market and reducing tax income for government. Who do you think will be forced into making up for the lost tax revenue?

A Community Choice aggregator can also legally misrepresent the quality of their service by delivering coal or natural gas powered electricity without telling their customers. How? By purchasing “unbundled” (not attached to any specific project) Renewable Energy Certificates. RECs are certificates sold in the open market that allows the buyer to claim legal ownership of 1 megawatt of renewable energy anywhere in the world. Originally accepted in the financial marketplace these certificates have been found to be deceptive and have lost favor with investors.

And I’m sorry, but there is not enough “green power” to meet the claims of Community Choice Aggregators and I find this deception reprehensible.

Finally, there is something inherently wrong with a program that allows government to be the partner, competitor, regulator and taxing authority over a company and an entire industry. Or as the old saying goes, “power corrupts, absolute power corrupts absolutely”.

We, as citizens, rightly give some coercive powers to our government. Policing, taxing, and regulating are powers needed to be a government. Giving Community Choice Aggregators the powers detailed above is wrong and needs to stop here.